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EXHIBIT 10.9
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is entered into as of the 31st day
of October, 1995, by and between The First National Bank of Boston ("Lender")
and MKS Instruments, Inc., a Massachusetts corporation ("Borrower").
PREMISES:
WHEREAS, the Borrower has requested that the Lender make loans to it; and
WHEREAS, the Lender is willing to lend funds to the Borrower on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to terms defined elsewhere in this Agreement,
the following terms shall have the meanings indicated, which meanings shall be
equally applicable to both the singular and plural forms of such terms:
1.1.1 "Affiliate" of any Person shall mean any other Person which,
directly or indirectly, controls, or is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of any
Person shall mean the power, directly or indirectly, either to (i) vote 10% or
more of the securities having ordinary voting power for the election of
directors of such Person or (ii) direct the management and policies of such
Person, whether by contract or otherwise. As to the Borrower, the term
"Affiliate" shall include, without limitation, any partnership or joint venture
of which the Borrower or any Affiliate of the Borrower is a general partner or
is a limited partner with more than a ten percent (10%) interest, and any
director or executive officer of the Borrower.
1.1.2 "Base Rate" shall mean the rate of interest announced by the
Lender at its head office from time to time as its "Base Rate".
1.1.3 "Base Rate Loan" shall mean a portion of the Term Loan as to
which the Borrower elects to pay interest at the Base Rate as provided in
Section 2.2.
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1.1.4 "Business Day" shall mean a day on which commercial banks are
required to be open for business in Boston, Massachusetts.
1.1.5 "Cash Flow Ratio" shall have the meaning set forth in Section
7.7(c).
1.1.6 "Closing Date" shall mean the date of this Agreement.
1.1.7 "Compliance Certificate" shall have the meaning set forth in
Section 6.1(c).
1.1.8 "Consolidated Debt Service" shall mean for any period the sum
(without duplication) of Interest Expense, the interest portion of Financing
Lease Obligations and required principal payments on long-term debt of the
Borrower and its Subsidiaries, determined on a consolidated basis.
1.1.9 "Consolidated Indebtedness" shall mean the Indebtedness of the
Borrower and its Subsidiaries, determined on a consolidated basis.
1.1.10 "Consolidated Net Income" shall mean for any period the net
income (or loss) for such period (before extraordinary items and excluding the
net income of any business entity that is not a Subsidiary in which the Borrower
or one of its Subsidiaries has an ownership interest unless such net income
shall have actually been received by such company in the form of cash
distributions) of the Borrower and its Subsidiaries after deducting all
operating expenses, depreciation and amortization, Interest Expense, the
interest portion of Financing Lease Obligations, all taxes in respect of income
and profits paid or payable (including accrued Sub S distributions required to
make shareholder tax payments) and all other proper deductions, all determined
on a consolidated basis.
1.1.11 "Consolidated Operating Cash Flow" shall mean for any period,
the net income (or loss) for such period (before extraordinary items and
excluding the net income of any business entity that is not a Subsidiary in
which the Borrower or one of its Subsidiaries has an ownership interest unless
such net income shall have actually been received by such company in the form of
cash distributions) of the Borrower and its Subsidiaries before deducting
Interest Expense and taxes and after restoring thereto depreciation of real and
personal property and leasehold improvements and amortization and after
deducting cash taxes paid, Sub S distributions required to make shareholder tax
payments, and capital expenditures incurred, provided that capital expenditures
shall not include real estate purchases funded by debt.
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1.1.12 "Consolidated Tangible Net Worth" shall mean, at any time,
net stockholders' equity of the Borrower and its Subsidiaries determined in
accordance with generally accepted accounting principles including the book
amount of all minority interests in MKS International, Inc. but excluding the
book amount of all minority interests in other Affiliates and any foreign
exchange translation adjustment, with no upward adjustments due to a
reevaluation of assets (other than any such upward adjustment as may be required
under generally accepted accounting principles in connection with the
acquisition by the Borrower or any Subsidiary of another company or entity)
minus the following items (without duplication of deductions) appearing on the
balance sheet of the Borrower and its Subsidiaries:
(a) the book amount of all assets (including, without
limitation, goodwill, patents, trademarks, copyrights, organizational expense
and unamortized debt discount) that would be treated as intangibles under
generally accepted accounting principles;
(b) treasury stock; and
(c) any write-up in the book amount of any asset or Investment
subsequent to the Closing Date, resulting from a reevaluation or reappraisal
thereof from the amount entered in accordance with generally accepted accounting
principles by the Borrower or any Subsidiary on its books with respect to its
acquisition of the asset or Investment.
1.1.13 "Costs" shall have the meaning set forth in Section 9.4.
1.1.14 "Debt-to-Net Worth Ratio" shall have the meaning set forth in
Section 7.7(b).
1.1.15 "Default" shall mean any event that, with the lapse of time,
the giving of notice, or both, would become an Event of Default hereunder.
1.1.16 "Event of Default" shall have the meaning set forth in
Section 8.1 hereof.
1.1.17 "Financing Lease" shall mean any lease of the Borrower or a
Subsidiary, as lessee, that is shown or is required to be shown in accordance
with generally accepted accounting principles as a liability on the balance
sheet of the lessee thereunder.
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1.1.18 "Financing Lease Obligation" shall mean for any period the
monetary obligation of the lessee under a Financing Lease. The amount of a
Financing Lease Obligation at any date is the amount at which the lessee's
liability under the Financing Lease would be required to be shown on its balance
sheet at such date.
1.1.19 "Hazardous Substances" shall mean any hazardous waste, as
defined by 42 U.S.C. Section 6903(5), any hazardous substances, as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant, as defined by 42 U.S.C.
Section 9601(33), or any toxic substance, oil or hazardous materials or other
chemicals or substances regulated by any laws or regulations relating to the
discharge of air pollutants, water pollutants or processed wastewater.
1.1.20 "Indebtedness" shall mean, for any Person, (a) all
obligations of such Person that in accordance with generally accepted accounting
principles would be reflected on the balance sheet of such Person as a
liability, (b) all obligations of any other Person the payment or collection of
which such Person has guaranteed (except by reason of endorsement for collection
in the ordinary course of business) or in respect of which such Person is
liable, contingently or otherwise, including, without limitation, liable by way
of agreement to purchase, to provide funds for payment, to supply funds to or
otherwise to invest in such other Person, or otherwise to assure a creditor
against loss, (c) all obligations of any other Person for borrowed money or for
the deferred purchase price of property or services secured by (or for which the
holder of such indebtedness has an existing right, contingent or otherwise, to
be secured by) any mortgage, or other encumbrance upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness or obligations, and (d) Financing Lease Obligations of such
Person.
1.1.21 "Interest Expense" shall mean for any period the aggregate
amount of interest recorded, in accordance with generally accepted accounting
principles, on the financial statements for that period by the Borrower and its
Subsidiaries in respect of Consolidated Indebtedness incurred for borrowed
money.
1.1.22 "Interest Period" shall mean the period designated by the
Borrower as such in the Interest Rate Change Notice for any portion of the Term
Loan pursuant to and subject to the limitations set forth in Section 2.2.
1.1.23 "Interest Rate Change Notice" shall have the meaning set
forth in Section 2.2.
1.1.24 "Interest Rate Determination Date" shall mean the third
Business Day prior to the first day of the related Interest Period for a LIBOR
Loan.
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1.1.25 "Interim Maturity Date" shall mean the last day of any
Interest Period.
1.1.26 "Investments" shall have the meaning set forth in Section
7.4.
1.1.27 "LIBOR Loan" shall mean a portion of the Term Loan as to
which the Borrower elects to pay interest using the LIBOR Rate as provided in
Section 2.2.
1.1.28 "LIBOR Rate" shall mean for any Interest Rate Determination
Date, the rate obtained by dividing (i) the quotation offered by the Lender in
the interbank Eurodollar market for U.S. dollar deposits of amounts in
immediately available funds comparable to the portion of the Term Loan for which
the LIBOR Rate is being determined with a maturity comparable to the Interest
Period for which such LIBOR Rate will apply as of approximately noon (Boston
time) three Business Days prior to the commencement of such Interest Period by
(ii) a percentage equal to 100% minus the stated maximum rate of all reserves
required to be maintained against "Eurocurrency liabilities" as specified in
Regulation D (or against any other category of liabilities that includes
deposits by reference to which the interest rate on LIBOR Loans is determined)
as applicable on such date to any member bank of the Federal Reserve System.
1.1.29 "Licenses" shall have the meaning set forth in Section 4.8.
1.1.30 "Lien" shall mean any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether the interest is based on common law, statute or contract
(including the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes). For the purposes of this Agreement, the Borrower or a
subsidiary shall be deemed to be the owner of any property that it has acquired
or holds subject to a Financing Lease or a conditional sale agreement or other
arrangement pursuant to which title to the property has been retained by or
vested in some other Person for security purposes, and such retention or vesting
shall be deemed to be a Lien.
1.1.31 "Loan Documents" shall mean each of this Agreement, the Note,
and any other document or instrument executed by the Borrower in favor of the
Lender in connection with the transactions contemplated hereby.
1.1.32 "Obligations" shall mean, without limitation, any and all
liabilities, debts, and obligations of the Borrower to the Lender, of each and
every kind, nature and description, including but not limited to those arising
under this Agreement, any other Loan Document, the Loan Agreement between the
Borrower and the Lender dated as of November 1, 1993, as amended, the Foreign
Exchange Agreement between the Lender and the Borrower dated June 14, 1991, and
any
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interest rate swap agreement, whether now existing or hereafter incurred.
"Obligations" also means, without limitation, any and all obligations of the
Borrower to act or to refrain from acting in accordance with the terms,
provisions and covenants of this Agreement or of any other Loan Document.
1.1.33 "Permitted Liens" shall have the meaning set forth in Section
7.2.
1.1.34 "Person" shall mean any natural person, corporation,
unincorporated organization, trust, joint-stock company, joint venture,
association, company, partnership or government, or any agency or political
subdivision of any government.
1.1.35 "Subsidiary" shall mean any Person of which the Borrower at
the time owns, directly or indirectly, through another Subsidiary or otherwise,
50% or more of the equity interests.
1.1.36 "Term Loan" shall have the meaning set forth in Section 2.1.
1.1.37 "Term Loan Maturity Date" shall mean June 30, 2002.
1.1.38 "Term Note or Note" shall have the meaning set forth in
Section 2.1.
1.1.39 "Term Loan Account" shall mean the account on the books of
the Lender in the name of the Borrower in which the following shall be recorded:
the principal outstanding and interest accrued under the Term Loan; all Costs
with respect to the Term Loan; all payments made by the Borrower on account of
indebtedness evidenced by the Term Note; and other appropriate debits and
credits.
1.2 Accounting Terms. Accounting terms not specifically defined in this
Agreement shall have the meanings given to them under generally accepted
accounting principles.
1.3 Other Definitional Provisions. The words "hereof," "herein" and
"hereunder," and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement.
Any Article, Section, Exhibit or Schedule references are to this Agreement
unless otherwise specified.
ARTICLE II
TERM LOAN
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2.1 The Lender hereby agrees to make a seven-year term loan (the "Term
Loan") in the principal amount of $7,000,000 to the Borrower. The Term Loan
shall be evidenced by a term note (the "Term Note") payable to the Bank in the
form of Exhibit A hereto. Amortization of the Term Note shall be calculated on
the basis of a 7-year schedule of level monthly payments of principal with the
entire unpaid principal balance and all accrued and unpaid interest absolutely
due and payable on the Maturity Date.
2.2 Interest.
2.2.1 Borrower agrees to pay interest in respect of the unpaid
principal amount of the Term Loan from the date of this Agreement until paid in
full as follows. The Term Loan shall bear interest at the Base Rate unless the
Borrower desires to pay interest on all or a portion of the Term Loan at the
following rate:
(i) During any period in which the Borrower maintains a
Debt-to-Net Worth Ratio not in excess of 1.35 to 1:
(a) and a Cash Flow Ratio of from 1.35 to 1 to and
including 1.75 to 1, the LIBOR Rate plus 1.60%;
(b) and a Cash Flow Ratio of from 1.76 to 1 to and
including 2.0 to 1, the LIBOR Rate plus 1.30%;
(c) and a Cash Flow Ratio of from 2.01 to 1 to and
including 3.0 to 1, the LIBOR Rate plus 1.10%; or
(d) and a Cash Flow Ratio in excess of 3.0 to 1, the
LIBOR Rate plus .90%; or
(ii) During any period in which the Borrower maintains a
Debt-to-Net Worth Ratio of 1.35 to 1 or more or a Cash Flow Ratio of
less than 1.35 to 1, the LIBOR Rate plus 2.00%.
2.2.2 Whenever the Borrower desires to obtain the LIBOR Rate, it may
request that the Lender provide quotes as of any specified Interest Rate
Determination Date as to the LIBOR Rate for any or all Interest Periods, and the
Lender shall promptly provide such quotes. The Borrower shall give the Lender
prior telecopied or telephone notice (given not later than 10:00 a.m. (Boston
time)) at least three Business Days prior to the day the Interest Period is to
begin with respect to use of the LIBOR Rate. Each such notice (each an "Interest
Rate Change Notice") shall specify the desired interest rate, the amount of the
Term Loan to which such interest rate shall apply and the initial Interest
Period applicable thereto. If such notice is given by telephone, it shall be
immediately confirmed in writing.
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2.2.3 Upon the Interim Maturity Date of any LIBOR Loan, unless the
Borrower shall have given the Lender an Interest Rate Change Notice in
accordance with Section 2.2.2 requesting a new LIBOR Loan be made on such
Interim Maturity Date, the Borrower shall be deemed to have elected to pay
interest on such amount of the Term Loan at the Base Rate.
2.2.4 At the time the Borrower gives any Interest Rate Change
Notice, the Borrower shall elect the Interest Period for which the interest rate
elected shall apply, which Interest Period shall, at the option of the Borrower,
be a period of one, two, three, four, five or six months (as to a LIBOR Loan).
Notwithstanding anything to the contrary contained herein:
(i) if any Interest Period begins on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(ii) if any Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that if any Interest Period
would otherwise expire on the day that is not a Business Day but is
a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(iii) no Interest Period shall extend beyond the Term Loan
Maturity Date.
2.3 Term Loan Account. The principal and the amounts of all payments on
the Term Note shall be recorded by the Lender in the Term Loan Account of the
Borrower. All statements regarding the Term Loan Account shall be deemed to be
accurate absent manifest error or unless objected to by the Borrower within 30
days after receipt. The Borrower agrees to review each such statement promptly
after receipt and to bring any errors or discrepancies to the Lender's attention
promptly.
ARTICLE III
ADDITIONAL TERMS
3.1 Payments.
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3.1.1 The Borrower shall have the right to prepay the Note, in whole
at any time or in part from time to time, without premium or penalty, provided
that, except as set forth in Section 3.3, no portion of the Term Loan may be
prepaid on the first day of an Interest Period with respect thereto. The
Borrower shall give notice (by telex or telecopier, or by telephone (confirmed
in writing promptly thereafter)) to the Lender of each proposed prepayment
hereunder prior to 10:00 a.m. (Boston time), (x) with respect to Base Rate
Loans, upon the Business Day of the proposed prepayment and (y) with respect to
LIBOR Loans, at least three Business Days prior to the Business Day of the
proposed prepayment, which notice in each case shall specify the proposed
prepayment date (which shall be a Business Day), the aggregate principal amount
of the proposed prepayment and which portions of the Term Loan are to be
prepaid. LIBOR Loans that are voluntarily prepaid before the last day of the
applicable Interest Period shall be subject to the additional compensation
requirements set forth in Section 3.3, and each prepayment of a LIBOR Loan shall
be in an aggregate principal amount of not less than the total principal amount
outstanding at such time under such LIBOR Loan.
3.1.2 All payments of principal and interest due under the Note
(including prepayments), and any other amounts owing to the Lender under this
Agreement, shall be made by the Borrower not later than 3:00 p.m., Boston time,
on the day due in lawful money of the United States of America, to the Lender at
its Boston, Massachusetts office in immediately available funds. The Borrower
hereby authorizes the Lender to charge such payments as they become due, if not
otherwise paid by the Borrower, to any account of the Borrower with the Lender
as the Lender may elect.
3.1.3 Whenever any payment to be made hereunder or under any other
Loan Document shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time shall in such case be included in computing interest or other fees or
charges provided for under this Agreement or any other Loan Document; provided,
however, that with respect to LIBOR Loans, if the next succeeding Business Day
falls in another calendar month, such payment shall be made on the next
preceding Business Day.
3.1.4 All payments made by the Borrower on the Note shall be applied
by the Lender (a) first, to the payment of Costs with respect to the Note, (b)
second, to the payment of accrued and unpaid interest on the Note, in such order
as the Borrower shall direct, until all such accrued interest has been paid, and
(c) third, to the payment of the unpaid principal amount of the Note in such
order as the Borrower shall direct.
3.2 Capital Adequacy.
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3.2.1 If, after the date of this Agreement, the Lender shall have
reasonably determined in good faith that the adoption or effectiveness after the
date hereof of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Lender with any request or directive regarding capital adequacy (whether
or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of materially reducing the rate
of return on the Lender's capital or assets as a consequence of its commitments
or obligations hereunder to a level below that which the Lender could have
achieved but for such adoption, effectiveness, change or compliance (taking into
consideration the Lender's then current policies with respect to capital
adequacy), then from time to time, subject to Section 3.2.2, within 15 days
after demand by the Lender the Borrower shall pay to the Lender such additional
amount or amounts as will compensate the Lender for such reduction (after the
Lender shall have allocated the same fairly and equitably among all of its
customers or any class generally affected thereby).
3.2.2 The Lender will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Lender to any additional
payment under this Section 3.2 as promptly as practicable and shall be entitled
to such payment (a) in the case of a Base Rate Loan, only for costs incurred
from and after the date that the Lender gives such notice, and (b) in the case
of a LIBOR Loan, only for costs incurred in connection with Loans made pursuant
to an Interest Rate Change Notice issued after the date that the Lender gives
such notice. The Lender will furnish to the Borrower with such notice a
certificate signed by an officer thereof certifying that the Lender is entitled
to payment under this Section 3.2 and setting forth the basis (in reasonable
detail) and the amount of each request by the Lender for any additional payment
pursuant to this Section 3.2.
3.3 Special Provisions Governing LIBOR Loans. Notwithstanding any other
provisions of this Agreement, the following provisions shall govern with respect
to LIBOR Loans as to the matters covered:
3.3.1 Increased Costs, Illegality etc. (a) In the event that the
Lender shall have determined (which determination shall, if made in good faith
and absent manifest error, be final, conclusive and binding upon all parties):
(i) on any Interest Rate Determination Date, that by reason of
any changes arising after the date of this Agreement affecting the
interbank Eurodollar market, adequate and fair means do not exist
for ascertaining the applicable interest rate on the basis provided
for in the definition of LIBOR Rate; or
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(ii) at any time during any Interest Period, that the Lender
shall incur increased costs or reductions in the amounts received or
receivable hereunder with respect to a LIBOR Loan by reason of (x)
any change since the Interest Rate Determination Date for the
Interest Period in question in any applicable law or governmental
rule, regulation, guideline or order (or any interpretation thereof
and including the introduction of any new law or governmental rule,
regulation, guideline or order) (such as, for example but not
limited to, a change in official reserve requirements, but excluding
reserve requirements that have been included in calculating the
LIBOR Rate for such Interest Period) and/or (y) other circumstances
affecting the Lender, the interbank Eurodollar market or the
position of the Lender in the relevant market; or
(iii) at any time, that the making or continuance of any LIBOR
Loan has become unlawful by compliance by the Lender in good faith
with any law, governmental rule, regulation, guideline or order, or
has become impracticable as a result of a contingency occurring
after the date of this Agreement;
then and in any such event, the Lender shall promptly after making such
determination give notice (by telephone confirmed in writing) to the Borrower of
such determination. Thereafter (x) in the case of clause (i) above, any Interest
Rate Change Notice given by the Borrower with respect to a LIBOR Loan that has
not yet been incurred shall be deemed rescinded by the Borrower and LIBOR Loans
shall no longer be available until such time as the Lender notifies the Borrower
that the circumstances giving rise to such notice no longer exist or that,
notwithstanding such circumstances, LIBOR Loans will again be made available
hereunder, (y) in the case of clause (ii), the Borrower shall pay to the Lender,
upon written demand therefor (but only with respect to any LIBOR Loan made
pursuant to an Interest Rate Change Notice issued after the giving of the
written notice that LIBOR Loans will again be made available hereunder referred
to in clause (x) above), such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as the
Lender in its sole discretion shall determine) as shall be required to
compensate the Lender for such increased cost or reduction in amount received (a
written notice as to additional amounts owed the Lender, showing the basis for
such calculation thereof, shall be given to the Borrower by the Lender and
shall, absent manifest error, be final, conclusive and binding upon the parties
hereto), and (z) in the case of clause (iii), the Borrower shall take one of the
actions specified in Section 3.3.1(b) as promptly as possible and, in any event,
within the time period required by law.
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(a) At any time that any LIBOR Loan is affected by the
circumstances described in Section 3.3.l(a)(ii) or (iii), the Borrower may (and
in the case of a LIBOR Loan affected pursuant to Section 3.3.1(a) (iii) shall)
either (x) if the affected LIBOR Loan is then being made, withdraw the related
Interest Rate Change Notice by giving the Lender telephonic (confirmed in
writing) notice thereof on the same date that the Borrower was notified by the
Lender pursuant to Section 3.3.l(a), or (y) if the affected LIBOR Loans are then
outstanding, upon at least three Business Days' written notice to the Lender,
require the Lender to convert each LIBOR Loan so affected into a Base Rate Loan.
3.3.2 Compensation. The Borrower shall compensate the Lender, upon
its written request (which request shall set forth the basis for requesting such
amounts), for all reasonable losses, expenses and liabilities (including,
without limitation, any interest paid by the Lender to lenders of funds borrowed
by it to make or carry its LIBOR Loans to the extent not recovered by the Lender
in connection with the re-employment of such funds) and any loss sustained by
the Lender in connection with the re-employment of the funds (including, without
limitation, a return on such re-employment that would result in the Lender's
receiving less than it would have received had such LIBOR Loan remained
outstanding until the last day of the Interest Period applicable to such LIBOR
Loan) that the Lender may sustain: (i) if for any reason (other than a default
by or negligence of the Lender) a LIBOR Loan is not advanced on a date specified
therefor in an Interest Rate Change Notice (unless timely withdrawn pursuant to
Section 3.3.1(b)(x) above), (ii) if any payment or prepayment of any LIBOR Loans
occurs for any reason whatsoever (including, without limitation, by reason of
Section 3.3.1(b)) on a date that is prior to the last day of an Interest Period
applicable thereto, (iii) if any prepayment of any of its LIBOR Loans is not
made on the date specified in a notice of payment given by the Borrower pursuant
to Section 3.1 or (iv) as a consequence of an election made by the Borrower
pursuant to Section 3.3.1(b) (y) .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
In order to induce the Lender to enter into this Agreement and to make the
loans provided for herein, the Borrower makes the following representations and
warranties to the Lender, all of Which shall survive the execution and delivery
of this Agreement and the Note.
4.1 Organization, Existence and Power. The Borrower is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. The Borrower has the corporate power necessary to conduct the
business in which it is engaged, to own the properties owned by it and to
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consummate the transactions contemplated by the Loan Documents. The Borrower is
duly qualified or licensed to transact business in all places where the nature
of the properties owned by it or the business conducted by it makes such
qualification necessary and where the failure to be so qualified or licensed
would have a material adverse effect upon the consolidated financial condition,
assets or results of operations of the Borrower and its Subsidiaries taken as a
whole.
4.2 Authorization of Loan Documents; Binding Effect. The execution and
delivery of this Agreement and the other Loan Documents and the performance of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate actions of the Borrower. Each of the Loan Documents
constitutes the legal, valid and binding obligation of the Borrower that is a
party thereto, enforceable against the Borrower in accordance with its terms.
4.3 Authority. The Borrower has all requisite corporate power and
authority to execute, deliver and perform its obligations under the Loan
Documents. Neither the authorization, execution, delivery, or performance by the
Borrower of this Agreement or of any other Loan Document nor the performance of
the transactions contemplated hereby or thereby violates or will violate any
provision of the corporate charter or by-laws of the Borrower, or does or will,
with the passage of time or the giving of notice or both, result in a breach of
or a default under, or require any consent under or result in the creation of
any lien, charge or encumbrance upon any property or assets of the Borrower
pursuant to, any material instrument, agreement or other document to which the
Borrower is a party or by which the Borrower or any of its properties may be
bound or affected.
4.4 Capital Structure. The number of shares of stock of which the
Borrower's authorized capital stock consists, the par value per share of such
stock, the number of shares of such stock that have been issued and are
outstanding and the number of shares that have been issued and are held by the
Borrower as treasury shares are all disclosed on the Disclosure Schedule. Set
forth in the Disclosure Schedule is a complete and accurate list of all
Subsidiaries of the Borrower. The Disclosure Schedule indicates the jurisdiction
of incorporation or organization of each of the Subsidiaries, the number of
shares or units of each class of capital stock or other equity of the
Subsidiaries authorized, and the number of such shares or units outstanding and
the percentage of each class of such equity owned (directly or indirectly) by
the Borrower. No shares of stock or units of equity interests of the Borrower or
any of its Subsidiaries are covered by outstanding options, warrants, rights of
conversion or purchase or similar rights granted or created by the Borrower
except as set forth on the Disclosure Schedule. All the outstanding capital
stock of the Borrower has been validly issued and is fully paid and
nonassessable. All the stock or units of equity interests of the Borrower's
Subsidiaries that are owned by the Borrower or any Subsidiary of the Borrower
are owned free and clear of all
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14
mortgages, deeds of trust, pledges, liens, security interests and other charges
or encumbrances.
4.5 Financial Condition. The audited consolidated balance sheet of the
Borrower and its Subsidiaries dated as of December 31, 1994 and the audited
statements of operations, cash flows and stockholders' equity of the Borrower
and its Subsidiaries for and as of the end of the period ending on that date,
including any related notes (the "Audited Financial Statements"), and the
unaudited consolidated financial statements of the Borrower and its Subsidiaries
(the "Unaudited Financial Statements") dated as of July 1, 1995 (the "Balance
Sheet Date"), all of which (collectively, the "Financial Statements") were
heretofore furnished to the Lender, are true, correct and complete in all
material respects and fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries as of the date of each such
statement and have been prepared in accordance with generally accepted
accounting principles (subject, in the case of the Unaudited Financial
Statements, to the addition of notes and to normal year-end adjustments that
individually and in the aggregate are not expected to be material) consistently
applied throughout the periods involved. Other than as reflected in such
Financial Statements and except for liabilities incurred in the ordinary course
of business since the date thereof, the Borrower has no Indebtedness that is or
would be material to the financial condition of the Borrower, nor any material
unrealized or unanticipated losses from any commitments. Since the Balance Sheet
Date there has been no material adverse change in the consolidated financial
condition (as set forth in the Unaudited Financial Statements) or results of
operations of the Borrower and its Subsidiaries taken as a whole.
4.6 Pending Litigation. Except as set forth in the Disclosure Schedule,
there are no suits or proceedings pending or, to the knowledge of the Borrower,
threatened before any court or arbitration tribunal or by or before any
governmental or regulatory authority, commission, bureau or agency or public
regulatory body against the Borrower that if adversely determined would have a
material adverse effect on the consolidated financial condition, assets or
results of operations of the Borrower and its Subsidiaries taken as a whole.
4.7 Certain Agreements; Material Contracts. The Borrower is not a party to
any agreement or instrument or subject to any court order or governmental decree
adversely affecting in any material respect the business, properties, assets or
financial condition of the Borrower and its Subsidiaries taken as a whole.
4.8 Authorization, Etc. All authorizations, consents, approvals,
accreditations, certifications and licenses required under the corporate charter
or by-laws of the Borrower or under applicable law or regulation for the
ownership or operation of the property owned or operated by the Borrower or the
conduct of any business or activity conducted by the Borrower, including
provision of services for
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15
which reimbursement is made by third party payors, other than authorizations,
consents, approvals, accreditations, certifications or licenses the failure to
obtain and/or maintain which would not have a material adverse effect on the
consolidated financial condition, assets or results of operations of the
Borrower and its Subsidiaries taken as a whole (collectively, "Licenses") have
been duly issued and are in full force and effect. The Borrower has fulfilled
and performed all of its material obligations with respect to such Licenses (to
the extent now required to be fulfilled or performed) and no event has occurred
that would allow, with or without the passage of time or the giving of notice or
both, revocation or termination thereof or would result in any other material
impairment of the rights of the holder of any such License. All filings or
registrations with any governmental or regulatory authority required for the
conduct of the business or activity conducted by the Borrower have been made,
other than any such filings or registrations as to which the failure to make
same would not have a material adverse effect on the consolidated financial
condition, assets or results of operations of the Borrower and its Subsidiaries,
taken as a whole. Except as expressly contemplated hereby, no approval, consent
or authorization of or filing or registration with any governmental commission,
bureau or other regulatory authority or agency is required with respect to the
execution, delivery or performance of any of the Loan Documents.
4.9 No Violation. The execution, delivery and performance by the Borrower
of the Loan Documents do not and will not violate any provision of law or
regulation applicable to the Borrower, or any writ, order or decree of any court
or governmental or regulatory authority or agency applicable to the Borrower.
The Borrower is not in default, nor has any event occurred that with the passage
of time or the giving of notice, or both, would constitute a default, in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement, instrument or other document to which the
Borrower is a party, which default would have a material adverse effect on the
consolidated assets, financial condition or results of operations of the
Borrower and its Subsidiaries, taken as a whole. The Borrower is not in
violation of any applicable federal, state or local law, rule or regulation or
any writ, order or decree, which violation would have a material adverse effect
on the consolidated assets, financial condition or results of operations of the
Borrower and its Subsidiaries, taken as a whole. Except as otherwise set forth
in the Disclosure Schedule under the caption "Litigation," the Borrower has not
received notice of any violation of any federal, state or local environmental
law, rule or regulation or assertion that the Borrower has any obligation to
clean up or contribute to the cost of cleaning up any waste or pollutants.
4.10 Payment of Taxes. The Borrower and its Subsidiaries have properly
prepared and filed or caused to be properly prepared and filed all federal tax
returns and all material state and local tax returns that are required to be
filed and have paid all taxes shown thereon to be due and all other taxes,
assessments and governmental charges or levies imposed upon the Borrower and its
Subsidiaries, their income or
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16
profits or any properties belonging to the Borrower. No extensions of any
statute of limitations are in effect with respect to any tax liability of the
Borrower or any Subsidiary of the Borrower. No deficiency assessment or proposed
adjustment of the federal income taxes of the Borrower or any Subsidiary of the
Borrower is pending and the Borrower has no knowledge of any proposed liability
of a substantial nature for any tax to be imposed upon any of its properties or
assets.
4.11 Transactions With Affiliates, Officers, Directors and 1%
Shareholders. Except as set forth on the Disclosure Schedule, the Borrower has
no Indebtedness to or material contractual arrangement or understanding with any
Affiliate, officer or director of the Borrower, nor any shareholder holding of
record at least 1% of the equity of the Borrower nor, to the best of the
Borrower's knowledge (without independent inquiry), any of their respective
relatives.
4.12 ERISA. The Borrower has never established or maintained any funded
employee pension benefit plan as defined under Section 3(2) (A) of the Employee
Retirement Income Security Act of 1974, as amended and in effect on the date
hereof ("ERISA"), other than the plans described on the Disclosure Schedule. No
employee benefit plan established or maintained, or to which contributions have
been made, by the Borrower or any Subsidiary of the Borrower that is subject to
Part 3 of Title I-B of ERISA, had an accumulated funding deficiency (as such
term is defined in Section 302 of ERISA) as of the last day of the fiscal year
of such plan ended most recently prior to the date hereof, or would have had an
accumulated funding deficiency (as so defined) on such day if such year were the
first year of the plan to which Part 3 of Title I-B of ERISA applied. No
material liability to the Pension Benefit Guaranty Corporation has been incurred
or is expected by the Borrower to be incurred by it or any Subsidiary of the
Borrower with respect to any such plan or otherwise. The execution, delivery and
performance of this Agreement and the other Loan Documents will not involve on
the part of the Borrower any prohibited transaction within the meaning of ERISA
or Section 4975 of the Internal Revenue Code. The Borrower has never maintained,
contributed to or been obligated to contribute to any "multiemployer plan," as
defined in Section 3(37) of ERISA. The Borrower has never incurred any
"withdrawal liability" calculated under Section 4211 of ERISA, and there has
been no event or circumstance that would cause it to incur any such liability.
4.13 Ownership of Properties; Liens. The Borrower has good and marketable
title to all its material properties and assets, real and personal, that are now
carried on its books, including, without limitation, those reflected in the
Financial Statements (except those disposed of in the ordinary course since the
date thereof), and has valid leasehold interests in its properties and assets,
real and personal, which it purports to lease, subject in either case to no
mortgage, security interest, pledge, lien, charge, encumbrance or title
retention or other security agreement or arrangement of any nature whatsoever
other than Permitted Liens and those specified in the Disclosure
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17
Schedule. All of the Borrower's material leasehold interests and material
obligations with respect to real property are described on the Disclosure
Schedule.
4.14 Employment Matters. Except as set forth on the Disclosure Schedule,
there are no material grievances, disputes or controversies pending or, to the
knowledge of the Borrower, threatened between the Borrower and its employees,
nor is any strike, work stoppage or slowdown pending or threatened against the
Borrower.
4.15 Insurance. The Borrower maintains in force fire, casualty,
comprehensive liability and other insurance covering its properties and business
that is adequate and customary for the type and scope of its properties and
business.
4.16 Indebtedness. Except as reflected in the Financial Statements or set
forth in the Disclosure Schedule, and other than Indebtedness incurred in the
ordinary course of business since the Balance Sheet Date, the Borrower has no
outstanding Indebtedness.
4.17 Securities Law Compliance. The Borrower is not an "investment
company" as defined in the Investment Company Act of 1940, as amended. All of
the Borrower's outstanding stock was offered, issued and sold in compliance with
all applicable state and federal securities laws.
4.18 Accuracy of Information. None of the information furnished to the
Lender by or on behalf of the Borrower for purposes of this Agreement or any
Loan Document or any transaction contemplated hereby or thereby contains, and
none of such information hereinafter furnished will contain, any material
misstatement of fact, nor does or will any such information omit any material
fact necessary to make such information not misleading at such time.
ARTICLE V
CONDITIONS TO TERM LOAN
The obligations of the Lender to fund the Term Loan are subject to the
following conditions precedent, each of which shall have been met or performed
on or before the Closing Date:
5.1 No Default. No Default or Event of Default shall have occurred and be
continuing or will occur upon the making of the Term Loan.
5.2 Correctness of Representations. The representations and warranties
made by the Borrower in this Agreement shall be true and correct with the same
force and effect as though such representations and warranties had been made on
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and as of the Closing Date (i) except to the extent that the representations and
warranties set forth in Article IV of this Agreement are untrue as a result of
circumstances that have changed subsequent to the date hereof, which change has
caused no non-compliance by the Borrower with the covenants, conditions and
agreements in this Agreement and (ii) except that the references in Section 4.5
of this Agreement to the financial statements and the term "Balance Sheet Date"
are deemed to refer to the most recent financial statements (inclusive of
consolidated balance sheets and statements of operations, cash flows and
stockholders' equity of the Borrower and its Subsidiaries) furnished to the
Lender pursuant to Section 6.1(a) and (b) of this Agreement and the date of such
financial statements, respectively.
5.3 No Litigation; Certain Other Conditions. There shall be no suit or
proceeding (other than suits or proceedings disclosed on the Disclosure Schedule
on the date of this Agreement) pending or threatened before any court or
arbitration tribunal or by or before any governmental or regulatory authority,
commission, bureau or agency or public regulatory body that, if determined
adversely to the Borrower or any Subsidiary of the Borrower, is reasonably
likely to have a material adverse effect on the consolidated financial condition
or results of operations of the Borrower and its Subsidiaries taken as a whole.
5.4 No Material Adverse Change. There shall have been no material adverse
change in the consolidated financial condition or results of operations of the
Borrower and its Subsidiaries taken as a whole since the Balance Sheet Date.
5.5 Loan Documents. All Loan Documents shall be in full force and effect.
5.6 Opinion of Counsel. The Lender shall have received from independent
counsel to the Borrower an opinion or opinions, in form and substance
satisfactory to the Lender and its counsel.
5.7 Certificates of Legal Existence and Authority to do Business. The
Borrower shall have delivered to the Lender certificates as to its legal
existence and good standing under the laws of The Commonwealth of Massachusetts,
and the Borrower shall have delivered to the Lender certificates as to its
authority to do business as a foreign corporation in the States of California,
Colorado, Connecticut, Florida, Illinois, Maryland, Michigan, New Jersey, New
Mexico, New York, Oregon, Pennsylvania, Texas, and Arizona, each dated as of a
recent date.
5.8 Clerk's Certificate. The Borrower shall have delivered to the Lender a
certificate of its Clerk as to (i) its charter documents and by-laws, as
amended, (ii) corporate votes authorizing the execution and delivery of the Loan
Documents, and (iii) incumbency of the officers authorized to execute the Loan
Documents on behalf of the Borrower.
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5.9 Note. The Term Note, duly executed by the Borrower and otherwise
completed, shall have been delivered to the Lender.
5.10 Borrower's Certificate. The Borrower shall have furnished to the
Lender a certificate duly executed by the Borrower's chief financial officer
dated the Closing Date to the effect that each of the conditions set forth in
this Article V has been met as of such date.
5.11 Insurance. The Borrower shall have furnished to the Lender copies of
all its property insurance policies.
5.12 Environmental Site Assessment. The Borrower shall have delivered to
the Lender an environmental site assessment, in form and substance acceptable to
the Lender, from a consulting firm acceptable to the Lender, in which the
consultant shall have certified and opined that for the foreseeable future the
condition of the property in Methuen, Massachusetts that the Borrower has
purchased poses no significant risk to human health or the environment and no
further remedial action or investigation is necessary in accordance with federal
and state laws.
5.13 Merger Agreement. The Borrower shall have delivered to the Lender a
copy of a fully-executed Merger Agreement between the Borrower and UTI
Instruments Company.
5.14 All Proceedings Satisfactory. All corporate and other proceedings
taken prior to or on the Closing Date in connection with the transactions
contemplated by this Agreement, and all documents and exhibits related thereto,
shall be reasonably satisfactory in form and substance to the Lender and its
counsel.
5.15 Additional Documents. The Borrower shall have delivered to the Lender
all additional opinions, documents and certificates that the Lender or its
counsel may reasonably require.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that from the date of execution of this
Agreement and until the payment in full of the principal of and interest upon
the Note and payment and performance of all other Obligations:
6.1 Reporting Requirements. The Borrower shall, unless the Lender shall
otherwise consent in writing, furnish to the Lender:
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(a) As soon as available and in any event within sixty days
after the end of each of the first three quarters of each fiscal year of the
Borrower and its Subsidiaries, (i) a consolidated and consolidating balance
sheet of the Borrower and its Subsidiaries as of the end of such quarter and
(ii) consolidated and consolidating statements of operations, cash flows and
stockholders' equity of the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, all in reasonable detail and duly certified by the chief financial
officer of the Borrower as having been prepared in accordance with generally
accepted accounting principles consistently applied (subject to addition of
notes and ordinary year-end audit adjustments), together with a certificate of
the chief financial officer of the Borrower stating that no Default or Event of
Default has occurred and is continuing or, if a Default or an Event of Default
has occurred and is continuing, a statement as to the nature thereof and the
action that the Borrower proposes to take with respect thereto;
(b) As soon as available and in any event within ninety days
after the end of each fiscal year of the Borrower, the audited consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal
year and the audited consolidated statements of operations, cash flows and
stockholders' equity of the Borrower and its Subsidiaries for such fiscal year,
in each case accompanied by the unqualified opinion with respect thereto of the
Borrower's independent public accountants and a certification by such
accountants stating that they have reviewed this Agreement and whether, in
making their audit, they have become aware of any Default or Event of Default
and if so, describing its nature, along with the related unaudited consolidating
balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal
year and the unaudited consolidating statements of operations, cash flows' and
stockholders' equity of the Borrower and its Subsidiaries for such fiscal year;
(c) Not later than sixty days following the end of each fiscal
quarter a certificate signed by the chief financial officer of the Borrower
substantially in the form of Exhibit 6.1(c) hereto (the "Compliance
Certificate");
(d) Not later than thirty days after the end of each fiscal
year of the Borrower, the Borrower's representative forecast for the next fiscal
year on a consolidated basis, including, at a minimum, projected statements of
profit and loss and projected cash flow, prepared in accordance with generally
accepted accounting principles consistently applied;
(e) Promptly upon receipt thereof, one copy of each other
report submitted to the Borrower or any Subsidiary by independent accountants in
connection with any annual, interim or special audit made by them of the books
of the Borrower or any Subsidiary;
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(f) Promptly after the commencement thereof, notice of all
actions, suits and proceedings before any court, arbitration tribunal or
governmental regulatory authority, commission, bureau, agency or public
regulatory body that, if determined adversely to the Borrower or any Subsidiary
of the Borrower, would be reasonably likely to have a material adverse effect on
the consolidated financial condition or results of operations of the Borrower
and its Subsidiaries taken as a whole;
(g) As soon as possible, and in any event within five days
after the Borrower shall know of the occurrence of any Default or Event of
Default, the written statement of the chief financial officer of the Borrower
setting forth details of such Default or Event of Default and action that the
Borrower proposes to take with respect thereto;
(h) As soon as possible, and in any event within five days
after the occurrence thereof, written notice as to any other event of which the
Borrower becomes aware that with the passage of time, the giving of notice or
otherwise, is reasonably likely to result in a material adverse change in the
consolidated financial condition or results of operations of the Borrower and
its Subsidiaries taken as a whole; and
(i) Such other information respecting the business or
properties or the condition or operations, financial or otherwise, of the
Borrower as the Lender may from time to time reasonably request.
6.2 Loan Proceeds. The Borrower shall use the proceeds of the Term Loan
only for general corporate purposes including, but not limited to, funding the
acquisition of UTI Instruments Company and refinancing the purchase of certain
real property located in Methuen, Massachusetts.
6.3 Maintenance of Business and Properties; Insurance.
(a) The Borrower will continue to engage in business of the
same general nature as the business currently engaged in by the Borrower. The
Borrower will at all times maintain, preserve and protect all material
franchises and trade names and preserve all the Borrower's material tangible
property used or useful in the conduct of its business and keep the same in good
repair, working order and condition, ordinary wear and tear excepted, and from
time to time make all needful and proper repairs, renewals, replacements,
betterments, and improvements thereto so that the business carried on in
connection therewith may be conducted properly and advantageously at all times.
(b) The Borrower will keep all of its insurable properties now
or hereafter owned adequately Insured at all times against loss or damage by
fire or
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other casualty to the extent customary with respect to like properties of
companies conducting similar businesses and to the extent available at
commercially reasonable rates; and will maintain public liability and workmen's
compensation insurance insuring the Borrower to the extent customary with
respect to companies conducting similar businesses and to the extent available
at commercially reasonable rates, all by financially sound and reputable
insurers. All property insurance policies shall name the Lender as a loss payee
and shall contain a provision requiring at least 15 days' written notice to the
Lender prior to the cancellation or modification of each such policy. The
Borrower shall furnish to the Lender from time to time at the Lender's request
copies of all such insurance policies and certificates evidencing such insurance
coverage. Notwithstanding the foregoing, the Borrower may self-insure workmen's
compensation to the extent permitted by law and may also self-insure other risks
to the extent reasonably deemed prudent by the Borrower.
6.4 Payment of Taxes. The Borrower shall pay and discharge, or cause to be
paid and discharged, all material taxes, assessments, and governmental charges
or levies imposed upon the Borrower and its Subsidiaries or their income or
profits, or upon any other properties belonging to the Borrower prior to the
date on which penalties attach thereto, and all lawful claims that, if unpaid,
might become a lien or charge upon any material properties of the Borrower,
except for such taxes, assessments, charges, levies or claims as are being
contested by the Borrower in good faith by appropriate proceedings promptly
initiated and diligently prosecuted, for which adequate book reserves have been
established in accordance with generally accepted accounting principles, as to
which no foreclosure, distraint, sale or other similar proceedings shall have
been commenced, or, if commenced, have been effectively stayed.
6.5 Compliance with Laws, etc. The Borrower shall comply with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority, and obtain or maintain all Licenses required under
applicable law or regulation for the operation of the Borrower's business, where
noncompliance or failure to obtain or maintain would have a material adverse
effect on the consolidated financial condition, assets, or results of operations
of the Borrower and its Subsidiaries taken as a whole; provided, however, that
such compliance or the obtaining of such Licenses may be delayed while the
applicability or validity of any such law, rule, regulation or order or the
necessity for obtaining any such License is being contested by the Borrower in
good faith by appropriate proceedings promptly initiated and diligently
prosecuted.
6.6 Books, Records and Accounts. The Borrower shall keep true and correct
books, records and accounts, in which entries will be made in accordance with
generally accepted accounting principles consistently applied, and that shall
comply with the requirements of the Foreign Corrupt Practices Act of 1977 to the
extent applicable to the Borrower. The Lender or its representatives shall upon
reasonable
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notice to the Borrower be afforded, during normal business hours, access to and
the right to examine and copy any such books, records and accounts and the right
to inspect the Borrower's premises and business operations. All financial and
other information with respect to the Borrower and/or any of its Subsidiaries
now or hereafter obtained by the Lender under this Agreement or otherwise in
connection with any of the transactions contemplated hereunder shall be held in
confidence and shall not be released or made available to any other Person,
except (i) to governmental agencies (and examiners employed by same) having
oversight over the affairs of the Lender, (ii) pursuant to subpoena or similar
process issued by a court or governmental agency of competent jurisdiction, or
(iii) as otherwise directed by order of any court or governmental agency of
competent jurisdiction.
6.7 Further Assurances. The Borrower shall execute and deliver, at the
Borrower's expense, all notices and other instruments and documents and take all
actions, including, but not limited to, making all filings and recordings, that
the Lender shall reasonably request in order to assure to the Lender all rights
given to the Lender hereby or under any other Loan Document.
6.8 Bank Accounts. The Borrower shall maintain with the Lender a deposit
account and, at the written request of the Lender, shall give the Lender written
notice of any other accounts maintained by the Borrower, including the types of
accounts and names and addresses of the institutions with which such accounts
are maintained.
ARTICLE VII
NEGATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that from the date of execution of this
Agreement and until the payment in full of the principal of and interest upon
the Note and payment and performance of all other Obligations:
7.1 Sale of Assets; Mergers, Etc.
(a) Sale of Assets. The Borrower will not, except in the
ordinary course of business, sell, transfer, or otherwise dispose of, to any
Person any assets (including the securities of any Subsidiary).
(b) Mergers, Etc. Other than the merger of a Subsidiary into
UTI Instruments Company, neither the Borrower nor any Subsidiary will
consolidate with or merge into any other Person or permit any other Person to
consolidate with or merge into it, or acquire all or substantially all of the
assets of any Person, or sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets to any Person, except that
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(1) a Subsidiary may consolidate with or merge into the
Borrower or another Subsidiary; and
(2) the Borrower or any of its Subsidiaries may acquire
all or substantially all of the assets of any Person provided
the aggregate purchase price liability, including all
contingent liabilities, when aggregated with all such
acquisitions and any Investments permitted under Section
7.4(2) shall not exceed a total of $5,000,000 in each calendar
year during the term of this Agreement beginning with calendar
year 1995.
7.2 Liens and Encumbrances.
(a) Neither the Borrower nor any Subsidiary will (a) cause or
permit or (b) agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), any of its real or personal property,
whether now owned or subsequently acquired, to be subject to any Lien other than
Liens described below (which may herein be referred to as "Permitted Liens"):
(1) Liens securing the payment of taxes, assessments or
governmental charges or levies or the demands of suppliers,
mechanics, carriers, warehousers, landlords and other like
Persons, which payments are not yet due and payable or (as to
taxes) may be paid without interest or penalty; provided,
that, if such payments are due and payable, such Liens shall
be permitted hereunder only to the extent that (A) all claims
that the Liens secure are being actively contested in good
faith and by appropriate proceedings, (B) adequate book
reserves have been established with respect thereto to the
extent required by generally accepted accounting principles,
and (C) such Liens do not in the aggregate materially
interfere with the owning company's use of property necessary
or material to the conduct of the business of the Borrower and
its Subsidiaries taken as a whole;
(2) Liens incurred or deposits made in the ordinary
course of business (A) in connection with worker's
compensation, unemployment insurance, social security and
other like laws, or (B) to secure the performance of letters
of credit, bids, tenders, sales contracts, leases, statutory
obligations, surety, appeal and performance bonds and other
similar obligations, in each case not incurred in connection
with the borrowing of money, the
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25
obtaining of advances or the payment of the deferred purchase
price of property;
(3) Liens not otherwise described in Section 7.2(a)(l)
or (2) that are incurred in the ordinary course of business
and are incidental to the conduct of its business or ownership
of its property, were not incurred in connection with the
borrowing of money, the obtaining of advances or the payment
of the deferred purchase price of property and do not in the
aggregate materially detract from the value of, or materially
interfere with the owning company's use of, property necessary
or material to the conduct of the business of the Borrower and
its Subsidiaries taken as a whole;
(4) Liens in favor of the Lender or any of its
affiliates;
(5) Judgment liens or attachments that shall not have
been in existence for a period longer than 30 days after the
creation thereof, or if a stay of execution shall have been
obtained, for a period longer than 30 days after the
expiration of such stay or if such an attachment is being
actively contested in good faith and by appropriate
proceedings, for a period longer than 30 days after the
creation thereof;
(6) Liens existing as of the Closing Date and disclosed
on the Disclosure Schedule hereto;
(7) Liens provided for in equipment or Financing Leases
(including financing statements and undertakings to file
financing statements) provided that they are limited to the
equipment subject to such leases and the proceeds thereof;
(8) Leases or subleases with third parties or licenses
and sublicenses granted to third parties not interfering in
any material respect with the business of the Borrower or any
Subsidiary of the Borrower;
(9) Any Lien on any asset of any corporation existing at
the time such corporation is merged into or consolidated with
the Borrower or a Subsidiary of the Borrower and not created
in contemplation of such event;
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(10) Any Lien existing on any asset prior to the
acquisition thereof by the Borrower or any Subsidiary of the
Borrower and not created in contemplation of such event;
(11) Liens in respect of any purchase money obligations
for tangible property used in its business that at any time
shall not exceed $2,000,000, provided that any such
encumbrances shall not extend to property and assets of the
Borrower or any Subsidiary not financed by such a purchase
money obligation;
(12) Easements, rights of way, restrictions and other
similar charges or Liens relating to real property and not
interfering in a material way with the ordinary conduct of its
business; and
(13) Liens on its property or assets created in
connection with the refinancing of Indebtedness secured by
Permitted Liens on such property, provided that the amount of
Indebtedness secured by any such Lien shall not be increased
as a result of such refinancing and no such Lien shall extend
to property and assets of the Borrower or any Subsidiary not
encumbered prior to any such refinancing.
(b) In case any property is subjected to a Lien in violation
of Section 7.2(a), the Borrower will make or cause to be made provision whereby
the Note will be secured equally and ratably with all other obligations secured
by such property, and in any case the Note shall have the benefit, to the full
extent that the holders may be entitled thereto under applicable law, of an
equitable Lien equally and ratably securing the Note. Such violation of Section
7.2(a) shall constitute an Event of Default hereunder, whether or not any such
provision is made pursuant to this Section 7.2(b);
7.3 Sales and Leasebacks. The Borrower and its subsidiaries will not sell
or transfer any of their property and become, directly or indirectly, liable as
the lessee under a lease of such property (other than such transactions between
Subsidiaries).
7.4 Investments. Neither the Borrower nor any Subsidiary will make or
maintain any investments, made in cash or by delivery of property or assets, (a)
in any Person, whether by acquisition of capital stock, Indebtedness, or other
obligations or securities, or by loan or capital contribution, or otherwise, or
(b) in any property, whether real or personal, (items (a) and (b) being herein
called "Investments"), except the following:
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(1) Investments in direct obligations of, or guaranteed by, the
United States government, its agencies or any public instrumentality
thereof and backed by the full faith and credit of the United States
government with maturities not to exceed (or an unconditional right to
compel purchase within) one year from the date of acquisition;
(2) Investments in or to any Subsidiary or other Person provided any
such Investment when aggregated with all such other Investments permitted
under this Section 7.4(2) and any acquisitions permitted under Section
7.1(b) shall not exceed a total of $5,000,000 in each calendar year during
the term of this Agreement beginning with calendar year 1993;
(3) Investments and obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof with maturities not to exceed (or an unconditional
right to compel purchase within) 180 days of the date of acquisition that
are rated in one of the top two rating classifications by at least one
nationally recognized rating agency;
(4) Investments in demand and time deposits with, Eurodollar
deposits with, certificates of deposit issued by, or obligations or
securities fully backed by letters of credit issued by (x) any bank
organized under the laws of the United States, any state thereof, the
District of Columbia or Canada having combined capital and surplus
aggregating at least $100,000,000, or (y) any other bank organized under
the laws of a state that is a member of the European Economic Community
(or any political subdivision thereof), Japan, the Cayman Islands, or
British West Indies having as of any date of determination combined
capital and surplus of not less than $500,000,000 or the equivalent
thereof (determined in accordance with generally accepted accounting
principles) ("Permitted Banks");
(5) Shares of money market mutual funds registered under the
Investment Company Act of 1940, as amended;
(6) Foreign currency swaps and hedging arrangements entered into in
the ordinary course of business to protect against currency losses, and
interest rate swaps and caps entered into in the ordinary course of
business to protect against interest rate exposure on Indebtedness bearing
interest at a variable rate;
(7) Investments in publicly traded companies and mutual funds (other
than money market mutual funds) that in the aggregate shall not exceed
$5,000,000; and
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(8) Other Investments existing on the Closing Date and listed on the
Disclosure Schedule.
7.5 Transactions with Affiliates. Neither the Borrower nor any Subsidiary
will enter into any transaction (including the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate except upon fair
and reasonable terms that are at least as favorable to the Borrower or the
Subsidiary as would be obtained in a comparable arm's-length transaction with a
non-Affiliate.
7.6 ERISA Compliance. Neither the Borrower nor any of its Subsidiaries
will at any time permit any employee pension benefit plan (as such term is
defined in Section 3 of ERISA) maintained the Borrower or any of its
Subsidiaries or in which employees of the Borrower or any of its Subsidiaries is
entitled to participate to:
(a) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Internal Revenue Code of 1986, as amended, or
described in Section 406 of ERISA;
(b) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA, whether or not waived; or
(c) terminate under circumstances that could result in the
imposition of a Lien on the property of the Borrower or any Subsidiary of the
Borrower pursuant to Section 4068 of ERISA.
7.7 Financial Covenants. The Borrower covenants and agrees that:
(a) Consolidated Tangible Net Worth. The Consolidated Net
Worth as of the end of each fiscal quarter of the Borrower shall not be
less than the sum of (i) $30,777,703, and (ii) 50% of Consolidated Net Income
(excluding losses) for each consecutive fiscal quarter of the Borrower beginning
with the quarter ending September 30, 1995, on a cumulative basis.
(b) Consolidated Indebtedness. The ratio ("Debt-to-Net Worth
Ratio") of the Consolidated Indebtedness (excluding all guaranties except
guaranties with respect to borrowed money) as of the end of each fiscal quarter
of the Borrower beginning with the fiscal quarter ending September 30, 1995 to
its Consolidated Tangible Net Worth as of the end of each fiscal quarter of the
Borrower beginning with the fiscal quarter ending September 30, 1995 shall not
exceed 1.5 to 1.
(c) Consolidated Debt Service. The ratio (the "Cash Flow
Ratio") as of the end of each fiscal quarter of the Borrower of (i) Consolidated
Operating Cash Flow for the four consecutive fiscal quarters then ended to (ii)
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29
Consolidated Debt Service determined for the four consecutive fiscal quarters
then ended shall not be less than 1.25 to 1.00.
7.8 Contracts Prohibiting Compliance with Agreement. The Borrower will not
without the prior written consent of the Lender enter into any contract or other
agreement that would prohibit or in any way restrict the ability of the Borrower
to comply with any provision of this Agreement.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Default. If any one of the following events ("Events of Default")
shall occur:
(a) Any representation or warranty made by the Borrower herein
or in any other Loan Document, or in any certificate or report furnished by the
Borrower hereunder or thereunder, shall prove to have been incorrect in any
material respect when made;
(b) Payment of any principal or interest due under the Note
shall not be made on or before the date due;
(c) A final judgment in excess of $2,000,000 shall be rendered
against the Borrower or any of its Subsidiaries for the payment of money that,
after deducting the amount of any insurance proceeds paid or payable to or on
behalf of the Borrower or its Subsidiary in connection with such judgment, is in
excess of $2,000,000, and the same shall remain undischarged for a period of
thirty (30) days, during which period execution shall not effectively be stayed.
If a dispute exists with respect to the liability of any insurance underwriter
under any insurance policy of the Borrower or its Subsidiary, no deduction under
this subsection shall be made for the insurance proceeds that are the subject of
such dispute;
(d) The Borrower or any Subsidiary shall (1) voluntarily
terminate operations or apply for or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of such
Person or of all or a substantial part of the assets of such Person, (2) admit
in writing its inability, or be generally unable, to pay its debts as the debts
become due, (3) make a general assignment for the benefit of its creditors, (4)
commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter
in effect), (5) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, (6) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Federal Bankruptcy Code or applicable state
bankruptcy
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30
laws or (7) take any corporate action for the purpose of effecting any of the
foregoing;
(e) Without its application, approval or consent, a proceeding
shall be commenced, in any court of competent jurisdiction, seeking in respect
of the Borrower or any Subsidiary: the liquidation, reorganization, dissolution,
winding-up, or composition or readjustment of debt, the appointment of a
trustee, receiver, liquidator or the like of such Person or of all or any
substantial part of the assets of such Person, or other like relief in respect
of such Person under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts; and, if the proceeding is
being contested in good faith by such Person, the same shall continue
undismissed, or unstayed and in effect for any period of 45 consecutive days, or
an order for relief against such Person shall be entered in any case under the
Federal Bankruptcy Code or applicable state bankruptcy laws;
(f) Any foreclosure or other proceedings shall be commenced to
enforce, execute or realize upon any lien, encumbrance, attachment, trustee
process, mortgage or security interest for payment of an amount in excess of
$250,000 against the Borrower or any Subsidiary;
(g) Default shall be made in the due observance or performance
of any covenant or agreement under Article VII;
(h) Default shall be made in the due observance or performance
of any covenant or agreement contained herein (and not constituting an Event of
Default under any other clause in this Article VIII) or in any other Loan
Document or in any other agreement between the Lender and the Borrower
evidencing or securing borrowed monies and such default shall continue and shall
not have been remedied within thirty days after the date on which such default
occurred;
(i) The Borrower or any of its Subsidiaries shall fail to make
any payment of principal or interest beyond the period of grace contained in any
instrument or agreement evidencing any indebtedness (other than to the Lender)
for money borrowed in excess of $100,000 (unless such default is the result of a
good faith dispute arising under such agreement or instrument and the other
party or parties thereto have not accelerated the maturity of such
indebtedness), or default shall be made by the Borrower or any of its
Subsidiaries in the performance of any other covenant or agreement contained in
any such agreement or instrument as a result of which the other party thereto
proceeds to accelerate the maturity of the indebtedness of such Person under
such agreement or instrument;
(j) There shall occur any material adverse change in the
financial condition of the Borrower;
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31
(k) There shall occur any Event of Default under the Loan
Agreement between the Borrower and the Lender dated as of November 1, 1993;
then, in the case of any such event, other than an event described in subsection
(d) or (e) of this Section 8.1, the Lender may, at its option immediately
declare any Obligations to it not otherwise due and payable at such time to be
forthwith due and payable, whereupon the same shall become forthwith due and
payable without further presentment, demand, protest, or other notice of any
kind, all of which are hereby expressly waived, anything contained herein or in
the Note to the contrary notwithstanding; and, in the case of any event
described in subsection (d) or (e) of this Section 8.1, any Obligation not
otherwise due and payable at such time shall become immediately due and payable
without presentment, demand, protest, or other notice of any kind, all of which
are hereby expressly waived, anything contained herein or in the Note to the
contrary notwithstanding; and, further, in each and every such occurrence the
Lender may proceed to protect and enforce its rights by suit in equity, action
at law and/or other appropriate proceedings either for specific performance of
any covenant or condition contained in this Agreement or in any instrument
delivered to the Lender pursuant to this Agreement, or in aid of the exercise of
any power granted in this Agreement or any such instrument.
8.2 Lender's Further Rights and Remedies. Upon the occurrence and during
the unremedied continuation of an Event of Default, the Lender shall have the
right to require the Borrower to provide the Lender with cash collateral or
other collateral of a type and value satisfactory to the Lender in an amount
equal to the Borrower's outstanding Obligations to the Lender. With respect to
such collateral (the "Collateral"), the Lender shall have the rights and
remedies of a secured party under the Uniform Commercial Code ("UCC") and the
Borrower agrees to execute and deliver to the Lender such security agreements
and financing statements under the UCC as the Lender may require, and to pay the
cost of filing the same. Any deposits or other sums at any time credited by or
due from the Lender to the Borrower shall at all times constitute Collateral for
the Obligations. The Lender may apply the net proceeds of any disposition of
Collateral or set-off to the Obligations in such order as the Lender may
determine, whether or not due. With respect to Obligations not yet due,
including contingent Obligations, the Lender may at its option hold Collateral
(including any proceeds thereof) until all such Obligations have been paid in
full.
ARTICLE IX
MISCELLANEOUS
9.1 No Waiver, Remedies Cumulative. No failure on the part of the Lender
to exercise and no delay in exercising any right hereunder shall operate as a
waiver
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32
thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and are not exclusive of any
remedies provided by law. Any condition or restriction imposed in this Agreement
with respect to the Borrower may be waived, modified or suspended by the Lender
but only on the Lender's prior action in writing and only as so expressed in
such writing and not otherwise.
9.2 Survival of Representations, Etc. All representations, warranties and
covenants made herein or in any Loan Document shall survive the delivery of the
Note and the consummation of all other transactions contemplated hereby or
thereby.
9.3 Right of Setoff. In addition to any rights now or hereafter granted
under applicable law or otherwise and not by way of limitation of any such
rights, upon the occurrence and during the unremedied continuation of an Event
of Default, the Lender is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to the Borrower
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and apply any and all deposits (general or special) and
any other indebtedness at any time held or owing by the Lender to or for the
credit or the account of the Borrower against and on account of the Obligations
and liabilities of the Borrower to the Lender under this Agreement or under any
of the other Loan Documents, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Loan Document,
irrespective of whether or not the Lender shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.
9.4 Indemnity; Costs, Expenses and Taxes. The Borrower hereby agrees to
indemnify the Lender and its legal representatives, successors, assigns and
agents against, and agrees to protect, save and keep harmless each of them from
and to pay upon demand, any and all liabilities, obligations, taxes (including
any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of any Loan Documents), liens,
charges, losses, damages, penalties, claims, actions, suits, costs, indemnities,
expenses and disbursements (including, without limitation, reasonable legal
fees, costs and expenses, including without limitation reasonable costs of
attending and preparing for depositions and other court proceedings), of
whatsoever kind and nature, imposed upon, incurred by or asserted against such
indemnified party in any way relating to or arising out of any of the
transactions contemplated hereunder or in any of the Loan Documents (all of the
foregoing, collectively, "Costs") except to the extent arising by reason of the
Lender's gross negligence, misconduct or breach hereof. Without limiting the
foregoing, the Borrower agrees to pay on demand (a) all out-of-pocket costs and
expenses of the Lender in connection with the preparation, execution and
delivery of this Agreement and any other Loan Documents, including without
limitation the reasonable fees and
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33
out-of-pocket expenses of Xxxxx, Xxxx & Xxxxx, special counsel for the Lender,
with respect thereto, as well as (b) the reasonable fees and all out-of-pocket
expenses of legal counsel, independent public accountants and other outside
experts retained by the Lender in connection with any request by the Borrower
for consents, waivers or other action or forbearance by the Lender hereunder,
for the modification or amendment hereof, or other like matters relating to the
administration of this Agreement; and (c) all reasonable costs and expenses, if
any, of the Lender incurred after the occurrence of any Event of Default
hereunder in connection with the enforcement of any of the Loan Documents or the
protection of any of the Lender's rights thereunder, including, without
limitation, any internal costs, including personnel costs of the Lender incurred
in connection with such administration and enforcement or protection.
9.5 Notices.
(a) Unless telephonic notice is specifically permitted
pursuant to the terms of this Agreement, any notice or other communication
hereunder to any party hereto shall be by telegram, telecopier, telex, delivery
in hand or by courier, or registered or certified mail (return receipt
requested) and shall be deemed to have been given or made when telegraphed,
telexed, telecopied (and confirmed received), delivered in hand or by courier,
or three days after being deposited in the mails, postage prepaid, registered or
certified, addressed to the party as follows (or at any other address that such
party may hereafter specify to the other parties in writing):
(a) If to the Lender:
The First National Bank of Boston
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx, Director
Telecopier No. (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx, Xxxx & Xxxxx
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
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34
(b) If to the Borrower:
MKS Instruments, Inc.
Six Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxx X. X'Xxxxx, Treasurer
Telecopier No. (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Hill & Xxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
9.6 MASSACHUSETTS LAW. THIS AGREEMENT AND EACH OF THE LOAN DOCUMENTS SHALL
BE DEEMED A CONTRACT MADE UNDER THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS AND
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF SAID STATE (WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICT OF
LAWS).
9.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Borrower and the Lender, and their respective legal
representatives, successors and assigns; provided that the Lender may assign its
rights hereunder, but the Borrower may not assign any of its rights hereunder.
9.8 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which when taken together shall constitute one and the same instrument.
9.9 JURISDICTION, SERVICE OF PROCESS.
(a) ANY SUIT, ACTION OR PROCEEDING AGAINST THE BORROWER WITH
RESPECT TO ANY OF THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT IN
RESPECT OF ANY THEREOF SHALL BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS LOCATED IN SUFFOLK COUNTY OR IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MASSACHUSETTS, AS THE LENDER (IN ITS SOLE
DISCRETION) MAY ELECT, AND THE BORROWER HEREBY ACCEPTS THE EXCLUSIVE
JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF ANY SUIT,
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35
ACTION OR PROCEEDING AND AGREES NOT TO ASSERT ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS.
(b) IN ADDITION, THE BORROWER HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR ANY JUDGMENT ENTERED BY ANY COURT IN
RESPECT THEREOF BROUGHT IN SUFFOLK COUNTY IN THE COMMONWEALTH OF MASSACHUSETTS,
AND HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUIT, ACTION OR
PROCEEDING BROUGHT IN SUFFOLK COUNTY IN THE COMMONWEALTH OF MASSACHUSETTS HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
9.10 Limit on Interest. It is the intention of the Lender and the Borrower
to comply strictly with all applicable usury laws; and, accordingly, in no event
and upon no contingency shall the Lender ever be entitled to receive, collect,
or apply as interest under the Note any interest, fees, charges or other
payments equivalent to interest, in excess of the maximum rate that the Lender
may lawfully charge under applicable statutes and laws from time to time in
effect; and, in the event that the Lender ever receives, collects or applies as
interest on the Note, any such excess, such amount that, but for this provision,
would be excessive interest shall be applied to the reduction of the principal
amount of the indebtedness evidenced by the Note; and, if the principal amount
of indebtedness evidenced by the Note, and all lawful interest thereon, is paid
in full, any remaining excess shall forthwith be paid to the Borrower, or other
party lawfully entitled thereto. In determining whether or not the interest paid
or payable, under any specific contingency exceeds the highest contract rate
permitted by applicable law from time to time in effect, the Borrower and the
Lender shall, to the maximum extent permitted under applicable law, characterize
any non-principal payment as a reasonable loan charge, rather than as interest.
Any provision of the Note, or of any other agreement between the Lender and the
Borrower, that operates to bind, obligate, or compel the Borrower to pay
interest in excess of such maximum lawful contract rate shall be construed to
require the payment of the maximum rate only. The provisions of this Section
9.10 shall be given precedence over any other provisions contained in the Note
or in any other agreement between the Lender and the Borrower that is in
conflict with the provisions of this Section 9.10.
9.11 Amendments, Modifications, Waivers. Any term of this Agreement or of
the Note may be amended and the observance of any term of this Agreement or of
the Note may be waived (either generally or in a particular instance and either
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36
retroactively or prospectively) only with the written consent of the Borrower
and the Lender.
9.12 Headings. The headings of this Agreement are for convenience only and
are not to affect the construction of or to be taken into account in
interpreting the substance of this Agreement.
9.13 WAIVER OF NOTICE, ETC. THE BORROWER WAIVES DEMAND, NOTICE, PROTEST,
NOTICE OF ACCEPTANCE OF THIS AGREEMENT, NOTICE OF LOANS MADE, CREDIT EXTENDED,
COLLATERAL RECEIVED OR DELIVERED OR OTHER ACTION TAKEN IN RELIANCE HEREON AND
ALL OTHER DEMANDS AND NOTICE OF ANY DESCRIPTION, EXCEPT AS REQUIRED HEREBY. WITH
RESPECT BOTH TO THE OBLIGATIONS AND COLLATERAL, THE BORROWER ASSENTS TO ANY
EXTENSION OR POSTPONEMENT OF THE TIME OF PAYMENT OR ANY OTHER INDULGENCE, TO ANY
SUBSTITUTION, EXCHANGE OR RELEASE OF COLLATERAL, TO THE ADDITION OR RELEASE OF
ANY PARTY OR PERSONS PRIMARILY OR SECONDARILY LIABLE, TO THE ACCEPTANCE OF
PRETRIAL PAYMENT THEREON AND THE SETTLEMENT, COMPROMISING OR ADJUSTING OF ANY
THEREOF, ALL IN SUCH MANNER AND AT SUCH TIME OR TIMES AS THE LENDER MAY DEEM
ADVISABLE. THE BORROWER AGREES THAT NO ACTIONS TAKEN BY ANY PERSON EXCEPT THE
LENDER SHALL IMPAIR OR OTHERWISE AFFECT ITS OBLIGATIONS HEREUNDER UNTIL ALL
OBLIGATIONS OF THE BORROWER HEREUNDER ARE SATISFIED IN FULL.
9.14 WAIVER OF TRIAL BY JURY. THE BORROWER WAIVES ANY AND ALL RIGHTS THAT
IT MAY HAVE TO A TRIAL BY JURY ON ANY CLAIM OR ACTION, OF ANY NATURE WHATSOEVER,
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
9.15 Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
9.16 Entire Agreement. This Agreement and the other Loan Documents
constitute the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof and shall supersede all
prior agreements and understandings, whether written or oral, between the
parties with respect to the subject matter hereof and thereof.
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37
9.17 Compliance with Covenants. All computations determining compliance
with Sections 6 and 7 shall utilize accounting principles in conformity with
those used in the preparation of the financial statements referred to in Section
4.5. If any subsequent financial reports of the Borrower shall be prepared in
accordance with accounting principles different from those used in the
preparation of the financial statements referred to in Section 4.5, the Borrower
shall inform the Lender of the changes in accounting principles and shall
provide to the Lender with such reports, such supplemental reconciling financial
information as may be required to ascertain compliance by the Borrower with the
covenants contained in this document.
9.18 Termination. This Agreement may be terminated by the Borrower at any
time upon written notice of such termination to Lender; provided, however, that,
unless and until the Term Loan made by the Lender hereunder and all other
obligations hereunder of the Borrower to the Lender existing (whether or not
due as of the time of the receipt of such notice by the Lender shall have been
paid in full, such termination shall in no way affect the rights and powers
granted to the Lender in connection with this Agreement, and until such payment
in full all rights and powers hereby granted to the Lender hereunder shall be
and remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as an agreement under seal as of the date first above
written.
MKS INSTRUMENTS, INC.
Witness:
/s/ Xxxxxxx X Xxxxx By: /s/ Xxxxxx X. X'Xxxxx
------------------- -----------------------------------
Title: Treasurer
THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Title: Director
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MKS INSTRUMENTS, INC.
FIRST AMENDMENT
TO LOAN AGREEMENT
This First Amendment (the "Amendment") dated as of February 23, 1996
amends the Loan Agreement dated as of October 31, 1995, as amended (the "Loan
Agreement"), between MKS Instruments, Inc. (the "Borrower") and The First
National Bank of Boston (the "Lender"), capitalized terms used herein but not
otherwise defined shall have the meanings assigned to them in the Loan
Agreement.
WHEREAS, the Borrower, the Lender and Chemical Bank shall enter into a
loan agreement (the "1996 Loan Agreement") on the date hereof; and
WHEREAS, the Lender and the Borrower agree that certain terms of the Loan
Agreement should be made consistent with similar terms in the 1996 Loan
Agreement;
NOW, THEREFORE, the Lender and the Borrower agree as follows:
Section 1. Amendment to the Loan Agreement.
(a) Section 3.2.2. of the Loan Agreement is hereby amended by deleting the
existing language and substituting the following:
3.2.2. The Lender will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Lender to any additional
payment under this Section 3.2 as promptly as practicable. The Lender will
furnish to the Borrower with such notice a certificate signed by an officer of
the Lender certifying that the Lender is entitled to payment under this Section
3.2 and setting forth the basis (in reasonable detail) and the amount of each
request by the Lender for any additional payment pursuant to this Section 3.2.
Such certificate shall be conclusive in the absence of manifest error. The
Borrower shall not be obligated to compensate the Lender pursuant to this
Section for amounts accruing prior to the date that is 180 days before the
Lender notifies the Borrower of its obligations to compensate the Lender for
such amounts.
(b) Sections 6.1(a) and 6.1(c) of the Loan Agreement are hereby amended by
replacing the word "sixty" in each with the word "forty-five".
(c) Section 7.1(b) of the Loan Agreement is hereby amended by deleting the
existing language and substituting the following:
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39
7.1(b) Mergers, Etc. Neither the Borrower nor any Subsidiary will
consolidate with or merge into any other Person or permit any other Person to
consolidate with or merge into it, or acquire all or substantially all of the
assets of any Person, or sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets to any Person, except that
(1) a Subsidiary may consolidate with or merge into the
Borrower or another Subsidiary; and
(2) the Borrower or any of its Subsidiaries may acquire all or
substantially all of the assets of any Person provided (i) such
Person is engaged in a line of business substantially similar to one
or more of Borrower's existing lines of business, (ii) the aggregate
purchase price liability incurred in any calendar year, including
all contingent liabilities, when aggregated with all such
acquisitions and any Investments permitted under Section 7.4(2) in
any calendar year shall not exceed 25% of Consolidated Tangible Net
Worth as of the end of the most recent fiscal quarter or, if 80% or
more of the purchase price is paid in capital stock of the Borrower,
40% of Consolidated Tangible Net Worth as of the end of the most
recent fiscal quarter and (iii) based on a pro forma calculation of
the ratios set forth in Section 7.7 as of the date such acquisition
is closed, assuming consolidation of the acquired business with the
Borrower for the four full fiscal quarters ended immediately
preceding such closing and pro forma debt and debt service payments
based on scheduled principal payments, including acquisition
borrowings, if any, and pro forma interest on total debt at then
prevailing borrowing rates, Borrower is in compliance with the
financial covenants set forth in Section 7.7.
(d) Section 7.2 of the Loan Agreement is hereby amended by deleting the
existing clause (11) and substituting the following:
(11) Liens in respect of any purchase money obligations for
tangible property used in its business, which obligations shall not
at any time exceed 5% of Consolidated Tangible Net Worth, provided
that any such encumbrances shall not extend to property and assets
of the Borrower or any Subsidiary not financed by such a purchase
money obligation;
(e) Section 7.3 of the Loan Agreement is hereby amended by adding the
following words to the end thereof prior to the close parenthesis: "and
transfers of capital equipment that will be leased pursuant to Financing
Leases".
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40
(f) Section 7.4 of the Loan Agreement is hereby amended by deleting the
existing clause (2) and substituting the following:
(2) Investments in or to any Subsidiary or other Person,
provided Borrower remains in compliance with Section 7.1(b);
and by deleting from clause (4) the word "$100,000,000" and replacing it with
the word "$500,000,000".
(g) Section 7.7 of the Loan Agreement is hereby amended by deleting
subsection (a) and replacing it with the following:
(a) Consolidated Tangible Net Worth. The Consolidated Tangible Net
Worth as of the end of each fiscal quarter of the Borrower shall:
(A) prior to an IPO, not be less than the sum of (i)
$38,000,000, and (ii) 50% of Consolidated Net Income (excluding losses)
for each consecutive fiscal quarter of the Borrower beginning with the
quarter ending March 31, 1996, on a cumulative basis; and
(B) after an IPO, not be less than the sum of (i) the amount
required by clause (A) above immediately prior to such IPO plus (ii) the
net proceeds to the Borrower of the IPO less (iii) the Sub S Dividends.
For purposes of the foregoing, the following terms shall have the meanings
indicated:
"IPO" shall mean the initial underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of the Borrower's Common Stock for the account of
the Borrower.
"Sub S Dividends" shall mean one or more distributions by the Borrower to
its shareholders who were shareholders prior to the IPO in an aggregate amount
equal to the Borrower's "accumulated adjustments account", as defined in Section
1368(a)(l) if the Internal Revenue Code of 1986, as of the date of the IPO.
(h) Section 8.1 of the Loan Agreement is hereby amended by replacing
existing clause (i) with the following:
(i) There shall occur any default under any instrument or agreement
evidencing any indebtedness for money borrowed in excess of $100,000 by the
Borrower or any of its Subsidiaries;
and by adding the following clauses (1) and (m) after clause (k):
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41
(l) There shall occur any Event of Default under any other loan or credit
agreement to which the Borrower and the Lender are parties;
(m) The transfer by Xxxx X. Xxxxxxxx and/or his Affiliates of securities
of the Borrower or the voting power related to such securities as a result of
which the power to elect, appoint or cause the election or appointment of at
least a majority of the members of the board of directors of the Borrower shall
no longer be held by Xxxx X. Xxxxxxxx and/or his Affiliates;
Section 2. Representations and Warranties. The Borrower hereby represents
and warrants as follows:
(a) The execution and delivery of this Amendment and the performance
of this Amendment, the Loan Agreement as amended hereby and each of the other
Loan Documents, and the transactions contemplated hereby and thereby, have been
authorized by all necessary corporate actions of the Borrower. This Amendment,
the Loan Agreement as amended hereby and each of the other Loan Documents
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms.
(b) The Borrower has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Amendment, the Loan
Agreement as amended hereby and each of the other Loan Documents. Neither the
authorization, execution, delivery or performance by the Borrower of this
Amendment nor the performance of the Loan Agreement as amended hereby or any
other Loan Document nor the performance of the transactions contemplated hereby
or thereby violates or will violate any provision of the corporate charter or
by-laws of the Borrower, or does or will, with the passage of time or the giving
of notice or both, result in a breach of or a default under, or require any
consent under or result in the creation of any lien, charge or encumbrance upon
any property or assets of the Borrower pursuant to, any material instrument,
agreement or other document to which the Borrower is a party or by which the
Borrower or any of its properties may be bound or affected.
(c) The execution and delivery by the Borrower of this Amendment and
the performance by the Borrower of the Loan Agreement as amended hereby and the
Loan Documents do not and will not violate any provision of law or regulation
applicable to the Borrower, or any writ, order or decree of any court or
governmental or regulatory authority or agency applicable to the Borrower.
Section 3. Conditions to Effectiveness. The effectiveness of this
Amendment is conditioned on the following:
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42
(a) The Borrower and the Lender shall each have executed and
delivered a counterpart of this Amendment;
(b) The representations and warranties contained in Article IV of
the Loan Agreement shall be true and correct in all material respects as of the
date hereof as though made on and as of the date hereof; and
(c) No Default or Event of Default under the Loan Agreement shall
have occurred and be continuing.
Section 4. Miscellaneous.
(a) On and after the date hereof, each reference in the Loan
Agreement to "this Agreement" or the words of like import shall mean and be
deemed to be a reference to the Loan Agreement as amended hereby.
(b) Except as amended and modified hereby, the Loan Agreement is in
all respects ratified and confirmed as of the date hereof, and the terms,
covenants and agreements therein shall remain in full force and effect.
(c) This Amendment and the modifications to the Loan Agreement set
forth herein shall be deemed to be a document executed under seal and shall be
governed by and construed in accordance with the laws of The Commonwealth of
Massachusetts.
(d) This Amendment may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same document.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the date and the year first above written.
MKS INSTRUMENTS, INC.
By: /s/ Xxxxxx X. X'Xxxxx
----------------------------------
Title: Treasurer
-------------------------------
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Title: Director
-------------------------------
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43
MKS INSTRUMENTS, INC.
WAIVER AND FOURTH AMENDMENT
TO LOAN AGREEMENT
This Waiver and Fourth Amendment (the "Waiver and Amendment") dated as
of January 28, 1999 concerns the Loan Agreement dated as of October 31, 1995
(the "Loan Agreement"), between MKS Instruments, Inc. (the "Borrower") and
BankBoston, N.A. (f/k/a The First National Bank of Boston, the "Lender"), as
amended on February 23, 1996, February 4, 1997 and February 3, 1998. Capitalized
terms used herein but not otherwise defined shall have the meanings assigned to
them in the Loan Agreement.
WHEREAS, the Borrower has requested that the Lender waive certain
Events of Default and agree to change certain financial covenants in the Loan
Agreement; and
WHEREAS, the Lender is willing, on the terms, subject to the conditions
and to the extent set forth below, to grant such a waiver and amend the Loan
Agreement to effect such changes;
NOW, THEREFORE, the Lender and the Borrower agree as follows:
Section 1. WAIVER. The Lender hereby waives the Events of
Default under Section 8.1(g), (j), (k) and (l) of the Loan Agreement resulting
from Borrower's failure to meet the financial covenant set forth in Section
7.7(c) of the Loan Agreement as of the end of the fiscal quarter ended December
31, 1998.
Section 2. AMENDMENT OF THE LOAN AGREEMENT.
(a) Section 2.2.1. of the Loan Agreement is hereby amended by
adding the following sentences at the end thereof:
Notwithstanding the preceding clauses (i) and (ii), from the date
hereof through the date on which the effect of a change resulting from
the Borrower's delivery of its financial statements and Compliance
Certificate for the quarter ending June 30, 1999 will take effect, the
only alternative to the Base Rate shall be the LIBOR Rate plus 1.65%.
The effect of any change to the Borrower's Debt-to-Net Worth Ratio or
Cash Flow Ratio on the interest rate available pursuant to Section
2.2.1(i) or (ii) shall take effect on the first day of the month
immediately following the month in which the Borrower delivers its
financial statements pursuant to Section 6.1(a) or (b) and Compliance
Certificate pursuant to Section 6.1(c).
44
(b) Section 7.7(c) of the Loan Agreement is hereby amended by
adding the following clause at the end thereof:
provided, however, that as of the end of each of the fiscal quarters
listed below, the Cash Flow Ratio shall not be less than the ratio
stated directly below such quarter:
Q4 1998 Q1 1999 Q2 1999 Q3 1999
------- ------- ------- -------
.6 to 1 .5 to 1 .5 to 1 1.1 to 1
provided, however, that, the foregoing notwithstanding, if the Cash
Flow Ratio for the first fiscal quarter of 1999 is less than 1 to 1,
then the Cash Flow Ratio for the second fiscal quarter of 1999 shall
not be less than 1 to 1 and further, that the Cash Flow Ratio for the
first and second fiscal quarters of 1999 shall mean the ratio as of the
end of each such quarter of (i) Consolidated Operating Cash Flow for
such fiscal quarter ended on such date to (ii) Consolidated Debt
Service for such quarter and that the Cash Flow Ratio for the third
fiscal quarter of 1999 shall mean the ratio as of the end of such
quarter of (i) Consolidated Operating Cash Flow for the first three
fiscal quarters of 1999 ended on such date to (ii) Consolidated Debt
Service for such quarters.
(c) Section 7.7 of the Loan Agreement is hereby amended by adding
the following subsection (d):
(d) EBIT-TO-INTEREST RATIO. The ratio of the sum of
Consolidated Net Income plus Interest Expense, the interest portion of
Financing Lease Obligations and all taxes in respect of income and
profits paid or payable (including accrued Sub S distributions required
to make shareholder tax payments) as of the end of each fiscal quarter
of the Borrower beginning with the fiscal quarter ended December 31,
1998 to Interest Expense during such quarter shall not be less than 2
to 1 for the fiscal quarters ending December 31, 1998 and March 31,
1999 and 3 to 1 for the fiscal quarters ending June 30, 1999 and
September 30, 1999.
Section 3. FEES. The Borrower shall pay to the Lender a fee of
$5,000 on the date of this Waiver and Amendment.
Section 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants as follows:
(a) The execution and delivery of this Waiver and
Amendment and the performance of this Waiver and Amendment, the Loan Agreement
as amended hereby and each of the other Loan Documents, and the transactions
contemplated
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45
hereby and thereby, have been authorized by all necessary corporate actions of
the Borrower. This Waiver and Amendment, the Loan Agreement as amended hereby
and each of the other Loan Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with
their respective terms.
(b) The Borrower has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Waiver and
Amendment, the Loan Agreement as amended hereby and each of the other Loan
Documents. Neither the authorization, execution, delivery or performance by the
Borrower of this Waiver and Amendment nor the performance of the Loan Agreement
as amended hereby or any other Loan Document nor the performance of the
transactions contemplated hereby or thereby violates or will violate any
provision of the corporate charter or by-laws of the Borrower, or does or will,
with the passage of time or the giving of notice or both, result in a breach of
or a default under, or require any consent under or result in the creation of
any lien, charge or encumbrance upon any property or assets of the Borrower
pursuant to, any material instrument, agreement or other document to which the
Borrower is a party or by which the Borrower or any of its properties may be
bound or affected.
(c) The execution and delivery by the Borrower of this
Waiver and Amendment and the performance by the Borrower of the Loan Agreement
as amended hereby and the Loan Documents do not and will not violate any
provision of law or regulation applicable to the Borrower, or any writ, order or
decree of any court or governmental or regulatory authority or agency applicable
to the Borrower.
Section 5. LOAN DOCUMENTS. This Waiver and Amendment shall be a
Loan Document for all purposes.
Section 6. CONDITIONS TO EFFECTIVENESS. The effectiveness of
this Waiver and Amendment is conditioned on the following:
(a) The Borrower and the Lender shall each have executed
and delivered a counterpart of this Waiver and Amendment;
(b) The representations and warranties contained in
Article IV of the Loan Agreement shall be true and correct in all material
respects as of the date hereof as though made on and as of the date hereof;
(c) No Default or Event of Default under the Loan
Agreement shall have occurred and be continuing other than the Events of Default
described in Section 1 hereof;
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46
(d) The Lender shall have received, in form and substance
satisfactory to the Lender:
(i) an opinion of independent counsel to the
Borrower with respect to this Waiver and Amendment;
(ii) a certificate as to the Borrower's legal
existence and good standing under the laws of The Commonwealth
of Massachusetts and;
(iii) a certificate of the Borrower's Clerk as to
(x) no changes in its charter documents and by-laws as
amended, (y) corporate votes authorizing the execution and
delivery of this Waiver and Amendment and (z) incumbency of
the officers authorized to execute this Waiver and Amendment
on behalf of the Borrower.
(e) The Borrower's audited consolidated financial
statements for the year ended December 31, 1998 (the "1998 Statements") shall
not differ in any materially adverse respect from the Borrower's unaudited
consolidated financial statements for the year ended December 31, 1998, which
the Borrower has provided to the Lender and upon which the Lender has relied in
agreeing to this Waiver and Amendment and the Borrower shall deliver the 1998
Statements to the Lender no later than 30 days after the date of this Waiver and
Amendment.
(f) The conditions set forth in Sections 5.2-5.5 of the
Loan Agreement shall have been met as of the date hereof, provided that for
purposes thereof and Section 4.5 of the Loan Agreement, the "Balance Sheet Date"
shall mean December 31, 1998 and the financial statements referred to therein
shall mean the unaudited statements for the year ended December 31, 1998, that
have been furnished to the Lender.
Section 7. MISCELLANEOUS.
(a) On and after the date hereof, each reference in the
Loan Agreement to "this Agreement" or words of like import shall mean and be
deemed to be a reference to the Loan Agreement as amended hereby.
(b) Except as amended and modified hereby, the Loan
Agreement is in all respects ratified and confirmed as of the date hereof, and
the terms, covenants and agreements therein shall remain in full force and
effect.
(c) This Waiver and Amendment and the modifications to
the Loan Agreement set forth herein shall be deemed to be a document executed
under seal and shall be governed by and construed in accordance with the laws of
The Commonwealth of Massachusetts.
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47
(d) This Waiver and Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties have caused this Waiver and Amendment
to be duly executed as of the date and the year first above written.
MKS INSTRUMENTS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Title: Treasurer
BANKBOSTON, N.A.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Title: Director
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